The Hindu Business Line : TVS Motor hopes to gain from lower working capital

Chennai, June 29 A near-doubling of interest costs ate into the 2008-09 profits of TVS Motor Company, but the company sees reasons to believe that the current year would see no repeat of that.

Interest costs were Rs 55 crore. Even allowing that the previous year’s interest charges of Rs 2.19 crore were net of a foreign exchange restatement gain of Rs 27 crore, the burden of financial costs on 2008-09 profit was heavy.

Net profit declined by 2 per cent to Rs 31 crore last year even while the topline grew 14 per cent.

TVS Motor’s Executive Vice-President – Finance, Mr S.G. Murali, says the company could breathe easy this year, because, apart from the general reduction in interest rates in the market, the company’s efforts towards compression of working capital has paid off.

Focus on topline

He told Business Line that Rs 80 crore would be released from reduction in working capital — a considerable help in bringing down interest burden. This came about by “streamlining supply chain and reducing inventory”.

“The focus will be on improving the topline substantially,” Mr Murali said. New product launches and softening commodity prices will help improve performance.

TVS Motor has been witnessing growth in sales for April and May. It launched a larger capacity Apache motorcycle earlier this month in the premium segment. It has also re-launched its major 2009 offering, the Flame motorcycle, under the brand name Flame SR 125.

A new motorcycle and a scooter are expected to be launched within the next few months.

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